[Federal Register Volume 86, Number 135 (Monday, July 19, 2021)]
[Notices]
[Pages 38129-38137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15197]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92395; File No. SR-NYSEArca-2021-57]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To List and Trade Shares of the NYDIG Bitcoin 
ETF Under NYSE Arca Rule 8.201-E

July 13, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on June 30, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade the shares of the NYDIG 
Bitcoin ETF (the ``Trust'') \4\ under NYSE Arca Rule 8.201-E. The 
common shares of beneficial interest of the Trust are referred to 
herein as the ``Shares.'' The proposed change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \4\ The Trust was formed as a Delaware statutory trust on 
January 22, 2021, and is operated as a grantor trust for U.S. 
federal tax purposes. The Trust has no fixed termination date.
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares of the Trust 
under NYSE Arca Rule 8.201-E, which governs the listing and trading of 
Commodity-Based Trust Shares.
Description of the Trust
    The Shares will be issued by the Trust, a Delaware statutory trust. 
According to the Registration Statement, the Trust's investment 
objective is to reflect the performance of the price of bitcoin less 
the expenses of the Trust's operations. The Trust will not seek to 
reflect the performance of any benchmark or index.\5\
---------------------------------------------------------------------------

    \5\ On February 16, 2021, the Trust filed a draft Registration 
Statement on Form S-1 under the Securities Act of 1933 (the 
``Registration Statement''). The description of the operation of the 
Trust herein is based, in part, on the Registration Statement. The 
Registration Statement is not yet effective, and the Shares will not 
trade on the Exchange until such time that the Registration 
Statement is effective.
---------------------------------------------------------------------------

    In seeking to achieve its investment objective, the Trust will only 
hold bitcoin. The Trust will value its assets daily in accordance with 
Generally Accepted Accounting Principles (``GAAP''), which, according 
to the Registration Statement, generally value bitcoin by reference to 
orderly transactions in the principal active market for bitcoin, as 
described below.
    NYDIG Asset Management LLC (the ``Sponsor'') is the Sponsor of the 
Trust. Delaware Trust Company (the ``Trustee'') is the trustee of the 
Trust and NYDIG Trust Company LLC (the ``Bitcoin Custodian'') will hold 
all of the Trust's bitcoin on the Trust's behalf as custodian. Both the 
Sponsor and the Bitcoin Custodian are indirect wholly-owned 
subsidiaries of New York Digital Investment Group LLC (``NYDIG'').
    Pursuant to the custodial agreement, the Bitcoin Custodian will be 
responsible for (1) safekeeping all of the bitcoin owned by the Trust, 
(2) opening an account that holds the Trust's bitcoin and (3) 
facilitating the transfer of bitcoin required for the operation of the 
Trust, as directed by the Sponsor. The Bitcoin Custodian is chartered 
as a limited purpose trust company by the New York State Department of 
Financial Services (``NYDFS'') and is authorized by NYDFS to provide 
digital asset custody services. U.S. Bancorp Fund Services, LLC will 
act as the transfer agent for the Trust (the ``Transfer Agent'') and as 
the administrator of the Trust (the ``Administrator'') to perform 
various administrative, tax, accounting and recordkeeping functions on 
behalf of the Trust. The Transfer Agent and the Administrator will also 
be responsible for issuing and redeeming Shares and calculating the net 
asset value (``NAV'') of the Shares, respectively.
    According to the Registration Statement, the Trust will process all 
creations and redemptions of Shares in transactions with financial 
firms that are authorized to do so (known as ``Authorized 
Participants''). When the Trust issues or redeems its Shares, it will 
do so only in ``in-kind'' transactions in blocks of 10,000 Shares

[[Page 38130]]

(a ``Creation Basket'') based on the quantity of bitcoin attributable 
to each Share of the Trust (net of accrued but unpaid Sponsor fees and 
any accrued but unpaid extraordinary expenses or liabilities). Because 
the creation and redemption of Creation Baskets will be effected via 
in-kind transactions based on the quantity of bitcoin attributable to 
each Share, the quantity of Creation Baskets so created or redeemed 
will generally not be affected by fluctuations in the value of bitcoin. 
When purchasing Creation Baskets, Authorized Participants or their 
agents will deliver bitcoin to the Trust's account with the Bitcoin 
Custodian in exchange for Creation Baskets. When redeeming Creation 
Baskets, Authorized Participants or their agents will receive bitcoin 
from the Trust through the Bitcoin Custodian. The Trust will not 
purchase or, barring a liquidation or extraordinary circumstances, sell 
bitcoin directly.
    According to the Registration Statement, to support the ability of 
Authorized Participants to provide liquidity at prices that reflect the 
value of the Trust's assets and to facilitate orderly transactions in 
the Shares, the Trust will ordinarily process redemptions of Shares on 
the next day when the Exchange is open for regular trading (a 
``Business Day'') following receipt of a redemption request by an 
Authorized Participant.
    The Sponsor believes that the design of the Trust will enable 
investors to effectively and efficiently implement strategic and 
tactical asset allocation strategies that use bitcoin by investing in 
the Shares rather than directly in bitcoin.
Custody of the Trust's Bitcoin
    According to the Registration Statement, and as described above, 
the Trust's Bitcoin Custodian will custody of all of the Trust's 
bitcoin. Custody of bitcoin typically involves the generation, storage 
and utilization of private keys. These private keys are used to effect 
transfer transactions--i.e., transfers of bitcoin from an address 
associated with the private key to another address. While private keys 
must be used to send bitcoin, private keys do not need to be used or 
shared in order to receive a bitcoin transfer; every private key has an 
associated public key and an address derived from that public key that 
can be freely shared, to which counterparties can transfer bitcoin. The 
Bitcoin network has a public ledger, meaning that anybody with access 
to the address can see the balance of digital assets in that address.
    The Bitcoin Custodian carefully considers the design of the 
physical, operational and cryptographic systems for secure storage of 
the Trust's private keys in an effort to lower the risk of loss or 
theft. According to the Registration Statement, no such system is 
perfectly secure and loss or theft due to operational or other failure 
is always possible. The Bitcoin Custodian uses a multi-factor security 
system under which actions by multiple individuals working together are 
required to access the private keys necessary to transfer such digital 
assets and ensure the Trust's exclusive ownership. The multi-factor 
security system generates private keys using a Federal Information 
Processing Standards Publication 140-2 (``FIPS 140-2'')-certified 
random number generator to ensure the keys' uniqueness. Before these 
keys are used, the Bitcoin Custodian validates that the public 
addresses associated with these keys have no associated digital asset 
balances. The software used for key generation and verification is 
tested by the Bitcoin Custodian and is reviewed by third-party advisors 
from the security community with specific expertise in computer 
security and applied cryptography. The private keys are stored in an 
encrypted manner using a FIPS 140-2-certified security module held in 
redundant secure, geographically dispersed locations with high levels 
of physical security, including robust physical barriers to entry, 
electronic surveillance and continuously roving patrols. The 
operational procedures of these facilities and of the Bitcoin Custodian 
are reviewed by third-party advisors with specific expertise in 
physical security. The devices that store the keys will never be 
connected to the internet or any other public or private distributed 
network--this is colloquially known as ``cold storage.'' Only specific 
individuals are authorized to participate in the custody process, and 
no individual acting alone will be able to access or use any of the 
private keys. In addition, no combination of the executive officers of 
the Sponsor or the investment professionals managing the Trust, acting 
alone or together, will be able to access or use any of the private 
keys that hold the Trust's bitcoin.
    The Trust generally does not intend to hold cash or cash 
equivalents. However, the Trust may hold cash and cash equivalents on a 
temporary basis to pay extraordinary expenses. The Trust will enter 
into a cash custody agreement with U.S. Bank N.A. under which U.S. Bank 
N.A. will act as custodian of the Trust's cash and cash equivalents.
Overview of Bitcoin and the Bitcoin Network
    According to the Registration Statement, Bitcoin is a digital 
asset, the ownership and behavior of which are determined by 
participants in an online, peer-to-peer network that connects computers 
that run publicly accessible, or ``open source,'' software that follows 
the rules and procedures governing the Bitcoin network, commonly 
referred to as the Bitcoin protocol. The value of bitcoin, like the 
value of other digital assets, is not backed by any government, 
corporation or other identified body. Ownership and the ability to 
transfer or take other actions with respect to bitcoin is protected 
through public-key cryptography. The supply of bitcoin is constrained 
formulaically by the Bitcoin protocol instead of being explicitly 
delegated to an identified body (e.g., a central bank or corporate 
treasury) to control. Units of bitcoin are treated as fungible. Bitcoin 
and certain other types of digital assets are sometimes referred to as 
digital currencies or cryptocurrencies. No single entity owns or 
operates the Bitcoin network, the infrastructure of which is 
collectively maintained by (1) a decentralized group of participants 
who run computer software that results in the recording and validation 
of transactions (commonly referred to as ``miners''), (2) developers 
who propose improvements to the Bitcoin protocol and the software that 
enforces the protocol and (3) users who choose what Bitcoin software to 
run. Bitcoin was released in 2009 and, as a result, there is little 
data on its long-term investment potential. Bitcoin is not backed by a 
government-issued legal tender or other assets or currency.
    Bitcoin is ``stored'' or reflected on a digital transaction ledger 
commonly known as a ``blockchain.'' A blockchain is a type of shared 
and continually reconciled database, stored in a decentralized manner 
on the computers of certain users of the digital asset. A blockchain is 
a canonical record of every digital asset: The blockchain records every 
``coin'' or ``token,'' balances of digital assets, every transaction 
and every address associated with a quantity of a particular digital 
asset. Bitcoin utilizes the blockchain to record transactions into and 
out of different addresses, facilitating a determination of how much 
bitcoin is in each address.
    Bitcoin is created by ``mining.'' Mining involves miners using a 
sophisticated computer program to repeatedly solve complex mathematical 
problems on specialized computer hardware. The mathematical problem

[[Page 38131]]

involves a computation involving all or some bitcoin transactions that 
have been proposed by the Bitcoin network's participants. When this 
problem is solved, the computer creates a ``block'' consisting of these 
transactions. As each newly solved block refers back to and 
``connects'' with the immediately prior solved block, the addition of a 
new block adds to the blockchain in a manner similar to a new link 
being added to a chain. A miner's proposed block is added to the 
blockchain once a majority of the nodes on the network confirm the 
miner's work. A miner that is successful in adding a block to the 
blockchain is automatically awarded a fixed amount of bitcoin for its 
efforts plus any transaction fees paid by transferors whose 
transactions are recorded in the block. This reward system is the means 
by which new bitcoin enter circulation. This reward system, called 
proof of work, also ensures that the local copies of the Bitcoin 
blockchain maintained by participants in the Bitcoin network are kept 
in consensus with one another.
The Bitcoin Market
    According to the Registration Statement, Bitcoin is the oldest, 
best-known and largest market-capitalization digital asset. Since the 
advent of bitcoin, numerous other digital assets have been created. The 
website CoinMarketCap.com tracks the U.S. dollar price and total market 
capitalization for each of more than 5,000 traded digital assets. As of 
April 30, 2021, bitcoin had a total market capitalization in excess of 
$1 trillion and represented more than 45% of the entire digital asset 
market.
    The first trading venues for bitcoin were informal exchange 
services marketed primarily in public online forums. Transactions on 
these services were effected via anonymous email, and the fiat currency 
portions of these transactions were effected through payment services 
such as PayPal. These services required their operators to manually 
match buyers and sellers in order to process transactions. Later, 
automated exchanges that matched buyers and sellers began to form. Many 
such exchanges have been created in the U.S. and abroad. In the U.S., a 
number of exchanges now operate under licensing from the NYDFS.
    Beginning in 2016, more institutional investors entered the bitcoin 
market. As a result, an increasing number of transactions have occurred 
in over-the-counter (``OTC'') markets instead of exchanges. This type 
of trading allows for bespoke trading arrangements that may ease of the 
burden of trade operations or reduce different types of risks (e.g., 
counterparty risk).
    As a result, there is not a single source for pricing bitcoin. 
According to the Registration Statement, the Trust believes that prices 
on the bitcoin trading venues are generally formed by the levels of 
demand on either side of the exchange's order book, and arbitrage 
between exchanges typically prevents larger and/or more persistent 
differences in prices between bitcoin trading venues. Factors that the 
Trust believes may influence the relative balance of buyers and sellers 
on the bitcoin trading venues include trading activity in the OTC 
markets, global or regional economic conditions, expected levels of 
inflation, growth or reversal in the adoption and use of bitcoin, 
developments in the regulation of bitcoin, changes in the preference of 
market participants between bitcoin and other digital assets, 
maintenance and development of the open-source software protocol of the 
Bitcoin network, and negative consumer or public perception of bitcoin 
specifically or digital assets generally.
    Bitcoin spot trading occurs on venues in the U.S. that are licensed 
to conduct that business by the NYDFS, other venues in the U.S. and 
non-U.S. venues. In addition, bitcoin futures and options trading 
occurs on exchanges in the U.S. regulated by the Commodity Futures 
Trading Commission (the ``CFTC''). The market for NYDFS-licensed and 
CFTC-regulated trading of bitcoin and bitcoin derivatives has developed 
substantially. Bitcoin market conditions in the three months ending on 
April 30, 2021 are briefly summarized as follows:
    <bullet> Bitcoin: Six NYDFS-licensed entities operate trading 
venues with order books for spot trading of bitcoin, with a total 
average daily trading volume of approximately $2.5 billion. Across 
these venues, the average daily deviation of prices was less than 
0.08%. The largest NYDFS-licensed trading venue by volume had an 
average bid-ask spread during the period of less than 0.05% for trades 
of $250,000.
    <bullet> Futures: Two CFTC-regulated exchanges facilitate trading 
of bitcoin futures, with a total average daily trading volume of 
approximately $2.9 billion.
    <bullet> Options: One CFTC-regulated exchange facilitates trading 
of options on bitcoin futures, with average monthly trading volume of 
approximately $380 million.
    The following table shows the average daily trading volume for 
bitcoin across the three largest NYDFS-licensed exchanges, as well as 
the average daily trading volume and average daily open interest (i.e., 
the average total bitcoin exposure of futures contracts held by market 
participants at the end of each trading day) for bitcoin futures 
contracts on the Chicago Mercantile Exchange (``CME'') and the 
Intercontinental Exchange. The bitcoin data shown is for trading 
volumes of bitcoin against U.S. dollars and exclude trading 
transactions of bitcoin against other digital assets (e.g., Tether) or 
other fiat currencies (e.g., euros).

----------------------------------------------------------------------------------------------------------------
                                                                                                      Futures
                                                                   Bitcoin daily   Futures daily   average open
                              Year                                  volume (USD     volume (USD    interest (USD
                                                                     millions)       millions)       millions)
----------------------------------------------------------------------------------------------------------------
2016............................................................            7.95
2017............................................................          215.44           41.10           81.87
2018............................................................          267.19           86.68          126.90
2019............................................................          216.97          172.60          246.62
2020............................................................          708.39          561.78          535.13
2021 (through 4/30).............................................        2,564.30        2,507.96        2,934.98
----------------------------------------------------------------------------------------------------------------

Calculation of Net Asset Value
    The Trust's NAV is determined in accordance with GAAP as the total 
value of bitcoin held by the Trust, plus any cash or other assets, less 
any liabilities including accrued but unpaid expenses. The NAV per 
Share is determined by dividing the NAV of the Trust by the number of 
Shares outstanding. The NAV of the Trust is typically determined as of 
4:00 p.m. Eastern Time (ET) on each Business

[[Page 38132]]

Day. The Administrator will calculate the NAV of the Trust once each 
Exchange trading day. The Exchange's Core Trading Session closes at 
4:00 p.m. ET. The Trust's daily activities are generally not reflected 
in the NAV determined for the Business Day on which the transactions 
are effected (the trade date), but rather on the following Business 
Day. The NAV for the Trust's Shares will be disseminated daily to all 
market participants at the same time.
Intraday Indicative Value
    In order to provide updated information relating to the Trust for 
use by shareholders and market professionals, the Trust will 
disseminate an intraday indicative value (``IIV'') per Share updated 
every 15 seconds. The IIV will be calculated by using the same 
methodology that the Trust uses to determine NAV, which, as described 
above, is to follow GAAP. Generally, GAAP requires the fair value of an 
asset that is traded on a market to be measured by reference to orderly 
transactions on an active market. Among all active markets with orderly 
transactions, the market that is used to determine the fair value of an 
asset is the principal market. The Sponsor expects that the principal 
market will initially generally be the NYDFS-regulated trading venue 
with the highest trading volume and level of activity.
    The IIV disseminated during the Exchange's Core Trading Session 
between 9:30 a.m. to 4:00 p.m. ET should not be viewed as an actual 
real-time update of the NAV, which will be calculated only once at the 
end of each trading day. The IIV will be widely disseminated on a per 
Share basis every 15 seconds during the Exchange's Core Trading Session 
by one or more major market data vendors.
Creation and Redemption of Shares
    According to the Registration Statement, the Trust will create and 
redeem Shares from time to time, but only in one or more blocks of 
10,000 Shares (known as ``Creation Baskets''). Creation Baskets will 
only be made in exchange for delivery to the Trust or the distribution 
by the Trust of the amount of bitcoin represented by the Shares being 
created or redeemed, the amount of which will be based on the quantity 
of bitcoin attributable to each Share of the Trust (net of accrued but 
unpaid Sponsor fees, extraordinary expenses or liabilities) being 
created or redeemed determined as of 4:00 p.m. ET on the day the order 
is properly received. Because creation and redemption of Creation 
Baskets will be effected via in-kind transactions based on the quantity 
of bitcoin attributable to each Share, the quantity of Creation Baskets 
so created or redeemed will generally not be affected by fluctuations 
in the value of bitcoin.
    According to the Registration Statement, Authorized Participants 
are the only persons that may place orders to create and redeem 
Creation Baskets. Authorized Participants must be (1) registered 
broker-dealers or other securities market participants, such as banks 
or other financial institutions, that are not required to register as 
broker-dealers to engage in securities transactions, and (2) entities 
that have an account with The Depository Trust Company (``DTC'') such 
as banks, brokers, dealers and trust companies. To become an Authorized 
Participant, a person must enter into an authorized participant 
agreement with the Trust and the Sponsor (the ``Authorized Participant 
Agreement''). The Authorized Participant Agreement provides the 
procedures for the creation and redemption of Shares and for the 
delivery of the bitcoin required for such creation and redemptions.
    According to the Registration Statement, Authorized Participants 
will place orders through the Transfer Agent. The Transfer Agent will 
coordinate with the Trust's Bitcoin Custodian in order to facilitate 
settlement of the Shares and bitcoin.
Creation Procedures
    According to the Registration Statement, on any Business Day, an 
Authorized Participant may place an order with the Transfer Agent to 
create one or more Creation Baskets. Purchase orders must be placed by 
4:00 p.m. ET or the close of regular trading on the Exchange, whichever 
is earlier. The day on which a valid order is received by the Transfer 
Agent is considered the purchase order date.
    By placing a purchase order, an Authorized Participant agrees to 
facilitate the deposit of bitcoin with the Trust. If required by the 
Sponsor and the Trust, prior to the delivery of Creation Baskets for a 
purchase order, the Authorized Participant must also have wired to the 
Transfer Agent the non-refundable transaction fee due for the purchase 
order. Authorized Participants may not withdraw a purchase order.
    The manner by which Creation Baskets are made is dictated by the 
terms of the Authorized Participant Agreement. By placing a purchase 
order, an Authorized Participant agrees to facilitate the deposit of 
bitcoin with the Bitcoin Custodian. If an Authorized Participant fails 
to consummate the foregoing, the order will be cancelled.
    The total deposit of bitcoin required to create each Creation 
Basket is an amount of bitcoin that is in the same proportion to the 
total amount of bitcoin held by of the Trust (net of accrued but unpaid 
Sponsor fees, extraordinary expenses or liabilities) on the date the 
purchase order is properly received as the number of Shares to be 
created under the purchase order is to the total number of Shares 
outstanding on the date the order is received.
    Following an Authorized Participant's purchase order, the Trust's 
bitcoin account with the Bitcoin Custodian (the ``Bitcoin Account'') is 
credited with the required bitcoin by the end of the second Business 
Day following the purchase order date. Upon receipt of the bitcoin 
deposit amount in the Trust's Bitcoin Account, the Bitcoin Custodian 
will notify the Transfer Agent, the Authorized Participant and the 
Sponsor that the bitcoin has been deposited. The Transfer Agent will 
then direct DTC to credit the number of Shares created to the 
Authorized Participant's DTC account.
Redemption Procedures
    According to the Registration Statement, the procedures by which an 
Authorized Participant can redeem one or more Creation Baskets mirror 
the procedures for the creation of Creation Baskets. Accordingly, on 
any Business Day, an Authorized Participant may place an order with the 
Transfer Agent to redeem one or more Creation Baskets. Redemption 
orders must be placed by 4:00 p.m. ET or the close of regular trading 
on the Exchange, whichever is earlier. A redemption order will be 
effective on the date it is received by the Transfer Agent.
    The redemption distribution from the Trust consists of a transfer 
of bitcoin to the redeeming Authorized Participant corresponding to the 
number of Shares being redeemed. The redemption distribution due from 
the Trust will be delivered once the Transfer Agent notifies the 
Bitcoin Custodian and the Sponsor that the Authorized Participant has 
delivered the Shares represented by the Creation Baskets to be redeemed 
to the Transfer Agent's DTC account. If the Transfer Agent's DTC 
account has not been credited with all of the Shares of the Creation 
Baskets to be redeemed, the redemption distribution will be delayed 
until such time as the Transfer Agent confirms receipt of all such 
Shares.
    Once the Transfer Agent notifies the Bitcoin Custodian and the 
Sponsor that the Shares have been received in the Transfer Agent's DTC 
account, the

[[Page 38133]]

Sponsor will instruct the Bitcoin Custodian to transfer the redemption 
distribution from the Trust's Bitcoin Account to the Authorized 
Participant.
Availability of Information
    Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the Consolidated Tape 
Association (``CTA'').
    In addition, the Trust's website will display the applicable end of 
day closing NAV. The daily holdings of the Trust will be available on 
the Trust's website before 9:30 a.m. E.T. The Trust's website will also 
include a form of the prospectus for the Trust that may be downloaded. 
The website will include the Shares' ticker and CUSIP information, 
along with additional quantitative information updated on a daily basis 
for the Trust. The Trust's website will include (1) the prior Business 
Day's trading volume, the prior Business Day's reported NAV and closing 
price, and a calculation of the premium and discount of the closing 
price or mid-point of the bid/ask spread at the time of NAV calculation 
(``Bid/Ask Price'') against the NAV; and (2) data in chart format 
displaying the frequency distribution of discounts and premiums of the 
daily closing price or Bid/Ask Price against the NAV, within 
appropriate ranges, for at least each of the four previous calendar 
quarters. The Trust's website will be publicly available prior to the 
public offering of Shares and accessible at no charge.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Trust.\6\ Trading in Shares of the Trust 
will be halted if the circuit breaker parameters in NYSE Arca Rule 
7.12-E have been reached. Trading also may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable.
---------------------------------------------------------------------------

    \6\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    If the Exchange becomes aware that the NAV with respect to the 
Shares is not disseminated to all market participants at the same time, 
it will halt trading in the Shares until such time as the NAV is 
available to all market participants.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. E.T. in 
accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading 
Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Rule 7.6-E, the minimum price variation (``MPV'') for quoting 
and entry of orders in equity securities traded on the NYSE Arca 
Marketplace is $0.01, with the exception of securities that are priced 
less than $1.00 for which the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Rule 8.201-E. The trading of the Shares will 
be subject to NYSE Arca Rule 8.201-E(g), which sets forth certain 
restrictions on firms that have been issued an Equity Trading Permit 
(``ETP Holders'') to act as registered Market Makers in Commodity-Based 
Trust Shares to facilitate surveillance. The Exchange represents that, 
for initial and continued listing, the Trust will be in compliance with 
Rule 10A-3 \7\ under the Act, as provided by NYSE Arca Rule 5.3-E. A 
minimum of 100,000 Shares of the Trust will be outstanding at the 
commencement of trading on the Exchange.
---------------------------------------------------------------------------

    \7\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Surveillance
    The Exchange represents that trading in the Shares of the Trust 
will be subject to the existing trading surveillances administered by 
the Exchange, as well as cross-market surveillances administered by 
FINRA on behalf of the Exchange, which are designed to detect 
violations of Exchange rules and applicable federal securities laws.\8\ 
The Exchange represents that these procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and federal securities 
laws applicable to trading on the Exchange.
---------------------------------------------------------------------------

    \8\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets and other entities that are members of the Intermarket 
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of 
the Exchange, or both, may obtain trading information regarding trading 
in the Shares from such markets and other entities. In addition, the 
Exchange may obtain information regarding trading in the Shares from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement 
(``CSSA'').\9\ The Exchange is also able to obtain information 
regarding trading in the Shares in connection with ETP Holders' 
proprietary or customer trades which they effect through ETP Holders on 
any relevant market.
---------------------------------------------------------------------------

    \9\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Trust may trade on markets that are members of ISG or with which the 
Exchange has in place a CSSA.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding 
(a) the description of the portfolios of the Trust, (b) limitations on 
portfolio holdings or reference assets, or (c) the applicability of 
Exchange listing rules specified in this rule filing shall constitute 
continued listing requirements for listing the Shares on the Exchange.
    The issuer has represented to the Exchange that it will advise the 
Exchange of any failure by the Trust to comply with the continued 
listing requirements, and, pursuant to its obligations under Section 
19(g)(1) of the Act, the Exchange will monitor for compliance with the 
continued listing requirements. If the Trust is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an information bulletin (the ``Information Bulletin'') 
of the special characteristics and risks associated with trading the 
Shares. Specifically, the Information Bulletin will discuss the 
following: (1) The procedures for purchases and redemptions of Shares; 
(2) NYSE Arca Rule 9.2-E(a), which imposes a duty of due diligence on 
its ETP Holders to

[[Page 38134]]

learn the essential facts relating to every customer prior to trading 
the Shares; (3) how information regarding portfolio holdings is 
disseminated; (4) the requirement that ETP Holders deliver a prospectus 
to investors purchasing newly issued Shares prior to or concurrently 
with the confirmation of a transaction; and (5) trading information.
    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders of the suitability requirements of NYSE Arca Rule 9.2-E(a) 
in an Information Bulletin. Specifically, ETP Holders will be reminded 
in the Information Bulletin that, in recommending transactions in the 
Shares, they must have a reasonable basis to believe that (1) the 
recommendation is suitable for a customer given reasonable inquiry 
concerning the customer's investment objectives, financial situation, 
needs, and any other information known by such ETP Holder, and (2) the 
customer can evaluate the special characteristics, and is able to bear 
the financial risks, of an investment in the Shares. In connection with 
the suitability obligation, the Information Bulletin will also provide 
that ETP Holders must make reasonable efforts to obtain the following 
information: (1) The customer's financial status; (2) the customer's 
tax status; (3) the customer's investment objectives; and (4) such 
other information used or considered to be reasonable by such ETP 
Holder or registered representative in making recommendations to the 
customer.
    In addition, the Information Bulletin will advise ETP Holders, 
prior to the commencement of trading, of the prospectus delivery 
requirements applicable to the Trust. The Information Bulletin will 
also discuss any exemptive, no-action, and interpretive relief granted 
by the Commission from any rules under the Act. In addition, the 
Information Bulletin will reference that the Trust is subject to 
various fees and expenses described in the Registration Statement.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \10\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and, in general, to protect 
investors and the public interest. The Exchange believes that the 
proposed rule change satisfies the requirements of Section 6(b)(5), as 
discussed in more detail below.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has approved numerous series of Trust Issued 
Receipts,\11\ including Commodity-Based Trust Shares,\12\ to be listed 
on U.S. national securities exchanges. In order for any proposed rule 
change from an exchange to be approved, the Commission must determine 
that, among other things, the proposal is consistent with the 
requirements of Section 6(b)(5) of the Act, and, in particular, the 
requirement that (i) a national securities exchange's rules are 
designed to prevent fraudulent and manipulative acts and practices; and 
(ii) an exchange proposal be designed, in general, to protect investors 
and the public interest.
---------------------------------------------------------------------------

    \11\ See Exchange Rule 8.200-E.
    \12\ Commodity-Based Trust Shares, as described in Exchange Rule 
8.201-E, are a type of Trust Issued Receipt.
---------------------------------------------------------------------------

    As discussed below, the Exchange, as the listing exchange for the 
Shares, and the CME, a regulated market of significant size relating to 
bitcoin, are both members of ISG, the purpose of which is ``to provide 
a framework for the sharing of information and the coordination of 
regulatory efforts among exchanges trading securities and related 
products to address potential intermarket manipulation and trading 
abuses.'' \13\ In addition, the Sponsor believes that, on the whole, 
the manipulation concerns previously articulated by the Commission have 
since been significantly mitigated, and do not exceed those that exist 
in the markets for other commodities that underly securities listed on 
U.S. national securities exchanges. Specifically, significant increase 
in trading volume and open interest in the bitcoin futures market, 
growth of liquidity in the spot market for bitcoin, and certain 
features of the Shares mitigate the manipulation concerns expressed by 
the Commission when it last reviewed exchange proposals to list a 
bitcoin exchange-traded product (``ETP'').
---------------------------------------------------------------------------

    \13\ See https://isgportal.org/overview.
---------------------------------------------------------------------------

    The proposed rule change is designed to protect investors and the 
public interest as an investment in the Trust would provide investors 
with exposure to bitcoin in a manner that may be more efficient, more 
convenient and more regulated than the purchase of bitcoin or other 
investment products that provide exposure to bitcoin.
    For example, the Sponsor notes that OTC bitcoin funds, which have 
attracted significant investor interest, offer exposure to bitcoin in a 
similar manner as the Trust. However, OTC bitcoin funds do not offer a 
creation or redemption mechanism that would keep their shares trading 
in line with their NAVs and, as a result, OTC bitcoin funds have 
historically traded at significant premiums or discounts compared to 
their NAVs. In contrast, when the Trust's Shares trade at a premium or 
discount compared to their NAV, creation or redemption can be 
facilitated by the Authorized Participants to drive the value of the 
Shares towards their NAV. Notably, investors in OTC bitcoin funds also 
have historically borne significantly higher fees and expenses than 
those that would be borne by investors in the Trust.
    Additionally, the Sponsor notes that investors holding bitcoin 
through a cryptocurrency ``exchange'' often face credit risk to the 
exchange for cash balances, and often face risk of loss or theft of 
their bitcoin as a result of the exchange using internet-connected 
storage (commonly known as ``hot'' wallets) and/or having poor private 
key management (e.g., insufficient password protection, lost key, 
etc.). In the Bitcoin Custodian, the Trust is holding bitcoin in 100% 
``cold'' storage, meaning the entire storage process is done completely 
offline, with a regulated and licensed entity applying industry best 
practices.
(i) Designed To Prevent Fraudulent and Manipulative Acts and Practices
    When considering whether an exchange's proposal to list bitcoin-
based ETPs is designed to prevent fraudulent and manipulative acts and 
practices, the Commission requires that an exchange demonstrate that 
there is a CSSA in place with a regulated market of significant size 
relating to the underlying assets.\14\
---------------------------------------------------------------------------

    \14\ As previously articulated by the Commission, ``The standard 
requires such surveillance-sharing agreements since `they provide a 
necessary deterrent to manipulation because they facilitate the 
availability of information needed to fully investigate a 
manipulation if it were to occur.' The Commission has emphasized 
that it is essential for an exchange listing a derivative securities 
product to enter into a surveillance-sharing agreement with markets 
trading underlying securities for the listing exchange to have the 
ability to obtain information necessary to detect, investigate, and 
deter fraud and market manipulation, as well as violations of 
exchange rules and applicable federal securities laws and rules. The 
hallmarks of a surveillance-sharing agreement are that the agreement 
provides for the sharing of information about market trading 
activity, clearing activity, and customer identity; that the parties 
to the agreement have reasonable ability to obtain access to and 
produce requested information; and that no existing rules, laws, or 
practices would impede one party to the agreement from obtaining 
this information from, or producing it to, the other party.'' See 
Securities Exchange Act Release No. 88284 (Feb. 26, 2020), 85 FR 
12595 (Mar. 3, 2020) (the ``Wilshire Phoenix Order'') at 12596.

---------------------------------------------------------------------------

[[Page 38135]]

    The Commission has also recognized that the ``regulated market of 
significant size'' standard is not the only means for satisfying 
Section 6(b)(5) of the Act, specifically providing that a listing 
exchange could demonstrate that ``other means to prevent fraudulent and 
manipulative acts and practices'' are sufficient to justify dispensing 
with the requisite surveillance-sharing agreement.\15\ Sponsors of 
proposed bitcoin-based ETPs in particular have attempted to demonstrate 
that other means besides surveillance-sharing agreements are sufficient 
to prevent fraudulent and manipulative acts and practices, and in 
particular have attempted to demonstrate that the bitcoin market is 
``uniquely'' and ``inherently'' resistant to fraud and 
manipulation.\16\ Such resistance to fraud and manipulation must be 
novel and beyond those protections that exist in traditional commodity 
markets or equity markets for which the Commission has long required 
surveillance-sharing agreements in the context of listing derivative 
securities products. To date, exchanges proposing rule changes to list 
bitcoin ETFs have not been able to establish that the relevant bitcoin 
market possesses a resistance to manipulation that is unique beyond 
that of traditional security or commodity markets such that it is 
inherently resistant to manipulation.
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 83723 (July 26, 
2018), 83 FR 37579 (August 1, 2018) (the ``Winklevoss Order'') at 
37580. The Commission has also specifically noted that it ``is not 
applying a `cannot be manipulated' standard; instead, the Commission 
is examining whether the proposal meets the requirements of the 
[Act] and, pursuant to its Rules of Practice, places the burden on 
the listing exchange to demonstrate the validity of its contentions 
and to establish that the requirements of the [Act] have been met.'' 
Id. at 37582.
    \16\ See Winklevoss Order, 83 FR at 37580, 37582-91; see also 
Securities Exchange Act Release No. 87267 (Oct. 9, 2019), 84 FR 
55382 (Oct. 16, 2019) (the ``Bitwise Order'') at 55383, 55385-406. 
The Commission noted that ``the Winklevoss Order addressed an 
assertion that `bitcoin and bitcoin [spot] markets' generally, as 
well as one bitcoin trading platform specifically, have unique 
resistance to fraud and manipulation; and the Bitwise Order 
addressed the assertion that prices from at least certain bitcoin 
trading platforms (`the `real' bitcoin spot market as opposed to the 
`fake' and non-economic bitcoin spot market') possessed such unique 
resistance.'' See Wilshire Phoenix Order at 12597.
---------------------------------------------------------------------------

    The Exchange understands the Commission's focus on potential 
manipulation of a bitcoin-based ETP in prior disapproval orders, 
including the Wilshire Phoenix Order, and believes that such concerns 
have since been largely mitigated. The Exchange believes that increases 
in investor participation in and institutional adoption of bitcoin have 
facilitated the maturation of the bitcoin trading ecosystem.
    However, the Exchange is not required to demonstrate ``other means 
to prevent fraudulent and manipulative acts and practices,'' such as 
the assertion that the relevant underlying bitcoin market is ``unique'' 
or ``inherently'' resistant to manipulation, if it can establish that 
it has a CSSA with a regulated bitcoin market of significant size, or 
that both the Exchange and the relevant futures market, in this case, 
the CME, hold common membership in ISG. To this end, the Exchange 
represents that both the Exchange and CME are members of the ISG. The 
remaining determination to be made is whether the CME bitcoin futures 
market constitutes a market of significant size, which the Exchange 
contends that it does, unlike at the time of the Wilshire Phoenix 
Order. In the context of this standard, the terms ``significant 
market'' and ``market of significant size'' include a market (or group 
of markets) as to which (a) there is a reasonable likelihood that a 
person attempting to manipulate the ETP would also have to trade on 
that market to successfully manipulate the ETP, so that a surveillance-
sharing agreement would assist in detecting and deterring misconduct, 
and (b) it is unlikely that trading in the ETP would be the predominant 
influence on prices in that market.\17\
---------------------------------------------------------------------------

    \17\ See Wilshire Phoenix Order at 12596.
---------------------------------------------------------------------------

(a) Manipulation of the ETP
    The significant growth in trading volumes, open interest, large 
open interest holders, and total market participants in the bitcoin 
futures market since the Wilshire Phoenix Order was issued is 
reflective of that market's growing influence on the spot price of 
bitcoin.
    Some academic research \18\ suggests that the bitcoin futures 
market has been leading bitcoin spot market price discovery since as 
early as 2018. However, in the Wilshire Phoenix Order, the Commission 
noted that academic research was, at the time, inconclusive as to the 
influence of the bitcoin futures market on price discovery in bitcoin 
spot markets, and noted specifically that existing research did not 
focus appropriately on lead-lag analyses, or on the influence of non-
U.S. bitcoin spot market.\19\ To this end, NYDIG has developed more 
recent proprietary research, including lead-lag analyses, that 
demonstrates that prices in the CME bitcoin futures market do indeed 
lead prices in the bitcoin spot market, including non-U.S. bitcoin spot 
markets. This finding supports the thesis that a market participant 
attempting to manipulate the Shares would have to trade on that market 
to manipulate the ETP.
---------------------------------------------------------------------------

    \18\ See Hu, Y., Hou, Y. and Oxley, L. (2019). ``What role do 
futures markets play in Bitcoin pricing? Causality, cointegration 
and price discovery from a time-varying perspective'' (available at: 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7481826/). This 
academic research paper concludes that ``There exist no episodes 
where the Bitcoin spot markets dominates the price discovery 
processes with regard to Bitcoin futures. This points to a 
conclusion that the price formation originates solely in the Bitcoin 
futures market. We can, therefore, conclude that the Bitcoin futures 
markets dominate the dynamic price discovery process based upon 
time-varying information share measures. Overall, price discovery 
seems to occur in the Bitcoin futures markets rather than the 
underlying spot market based upon a time-varying perspective.''
    \19\ See Wilshire Phoenix Order at 12613.
---------------------------------------------------------------------------

    Because Shares can only be created or redeemed in kind, and further 
because the Sponsor fee is accrued with respect to the quantity of 
bitcoin held by the Trust and paid in kind by the Trust, the Trust 
receives and holds only bitcoin. This substantially reduces the 
potential for manipulation of the number of Shares created or redeemed, 
which therefore substantially reduces the potential for shareholders to 
be harmed by manipulation.
    NYDIG's research shows that the bitcoin futures market is one of 
the primary venues that market participants use to transact large 
exposures to bitcoin. This can be attributed to multiple factors, such 
as institutional familiarity with futures margining and settlement 
processes, the simplicity of cash settlement instead of physical 
settlement in a novel asset, and the efficient leverage offered by 
exchange margining.
    In contrast to the efficient leverage offered through the futures 
market, many bitcoin spot trading venues require full pre-funding of 
trading, which means it would be highly capital intensive to ``spoof'' 
or ``layer'' order books on spot trading venues. This further supports 
NYDIG's conclusion that if a market participant intended to manipulate 
the price of bitcoin, and thereby the Shares, the bitcoin futures 
market is the one that would be manipulated first.
    As such, part (a) of the significant market test outlined above is 
satisfied and that common membership in ISG

[[Page 38136]]

between the Exchange and CME would assist the Exchange in detecting and 
deterring misconduct in the Shares.
(b) Predominant Influence on Prices in Spot and Bitcoin Futures
    According to the Sponsor, trading in the Shares would not be the 
predominant force on prices in the bitcoin futures market (or spot 
market) given the significant volume in the bitcoin futures market (in 
excess of $2.5 billion in average daily volume), the size of bitcoin's 
market cap (in excess of $1 trillion), and the significant liquidity 
available in the spot market (in excess of $2.5 billion in average 
daily volume, in each case as of April 30, 2021).
    In addition, NYDIG performed a conservative analysis, considering 
only a small subset of spot trading venues, that concludes that the 
cost to buy or sell $5 million worth of bitcoin averages roughly 20 
basis points.\20\ For a $10 million market order, the cost to buy or 
sell is roughly 40 basis points. This is comparable to the liquidity of 
existing commodity ETPs. Using more sophisticated execution strategies 
and additional liquidity sources would likely result in a lower cost to 
trade.
---------------------------------------------------------------------------

    \20\ These statistics are based on three random daily samples of 
bitcoin liquidity in USD (excluding stablecoins or Euro liquidity) 
based on executable quotes on Coinbase Pro, Bitstamp and Itbit from 
January 1, 2021 to April 30, 2021.
---------------------------------------------------------------------------

    As such, the overall size of the bitcoin market and the ability for 
market participants, including authorized participants creating and 
redeeming in-kind with the Trust, to buy or sell large amounts of 
bitcoin without significant market impact supports the Sponsor's belief 
that the Shares are unlikely to become a predominant force on pricing 
in either the bitcoin spot or bitcoin futures markets, satisfying part 
(b) of the test outlined above.
    The proposed rule change is also designed to prevent fraudulent and 
manipulative acts and practices in that the Shares will be listed and 
traded on the Exchange pursuant to the initial and continued listing 
criteria in NYSE Arca Rule 8.201-E, which involve the maintenance of 
surveillance procedures by the Exchange for the Shares. The Exchange 
has in place surveillance procedures that are sufficiently robust to 
properly monitor trading in the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws. The Exchange or FINRA, on behalf of the Exchange, or 
both, will communicate as needed regarding trading in the Shares with 
other markets that are members of the ISG, and the Exchange or FINRA, 
on behalf of the Exchange, or both, may obtain information regarding 
trading in the Shares with other markets and other entities that are 
members of the ISG, and the Exchange or FINRA, on behalf of the 
Exchange, or both, may obtain information regarding trading in the 
Shares from such markets and other entities. In addition, the Exchange 
may obtain information regarding trading in the Shares from markets 
that are members of ISG or with which the Exchange has in place a CSSA. 
Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able to 
obtain information regarding trading in the Shares through ETP Holders 
acting as registered Market Makers, in connection with such ETP 
Holders' proprietary or customer trades through ETP Holders which they 
effect on any relevant market.
(ii) Designed To Protect Investors and the Public Interest
    The Exchange believes the proposed rule change is designed to 
protect investors and the public interest.
    With the growth of OTC bitcoin funds, so too has grown the 
potential risk to U.S. investors. Significant and prolonged premiums 
and discounts, significant premium/discount volatility, high fees, 
insufficient disclosures, limited liquidity to trade or borrow shares, 
and the lack of surveillance and oversight through a listed exchange 
are putting U.S. investor money at risk in ways that could potentially 
be eliminated through access to the Shares. For example, the OTC 
bitcoin fund with the largest assets under management in the United 
States returned 46.41% year-to-date through April 30, 2021 while spot 
bitcoin returned 95.61% over the same period. The deviation in price 
performance can be attributed to the fluctuation in NAV of this fund.
    As such, the Sponsor believes that this proposed rule change would 
act to limit the risk to U.S. investors that are increasingly seeking 
exposure to bitcoin, with benefits such as the elimination of 
significant and prolonged premiums and discounts, the reduction of 
significant premium/discount volatility, the reduction of management 
fees through meaningful competition, the avoidance of risks associated 
with investing in operating companies that are imperfect proxies for 
bitcoin exposure, and substantially greater surveillance and regulatory 
oversight.
    The Exchange also notes there is a considerable amount of bitcoin 
price and market information available on public websites and through 
professional and subscription services. Investors may obtain, on a 24-
hour basis, bitcoin pricing information based on the spot price for 
bitcoin from various financial information service providers. The 
closing price and settlement prices of bitcoin are readily available 
from the Bitcoin exchanges and other publicly available websites. In 
addition, such prices are published in public sources, or on-line 
information services such as Bloomberg. The Trust will provide daily 
website disclosure of its bitcoin holdings, net asset value, and 
closing price daily.
    Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the CTA. Trading in Shares of 
the Trust will be halted if the circuit breaker parameters in NYSE Arca 
Rule 7.12-E have been reached or because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the Shares 
inadvisable. Additionally, the Exchange represents that the Exchange 
may halt trading during the day in which an interruption to the 
dissemination of the IIV occurs. If the interruption to the 
dissemination of the IIV persists past the trading day in which it 
occurred, the Exchange will halt trading no later than the beginning of 
the trading day following the interruption. In addition, if the 
Exchange becomes aware that the NAV with respect to the Shares is not 
disseminated to all market participants at the same time, it will halt 
trading in the Shares until such time as the NAV is available to all 
market participants.
    Moreover, prior to the commencement of trading, the Exchange will 
inform its ETP Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares and of the 
suitability requirements of NYSE Arca Rule 9.2-E(a). The Information 
Bulletin will advise ETP Holders, prior to the commencement of trading, 
of the prospectus delivery requirements applicable to the Trust. The 
Information Bulletin will also discuss any exemptive, no-action, and 
interpretive relief granted by the Commission from any rules under the 
Act. In addition, the Information Bulletin will reference that the 
Trust is subject to various fees and expenses described in the 
Registration Statement. The Information Bulletin will disclose that 
information about the Shares will be publicly available on the Trust's 
website.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an additional type of exchange-traded product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace.

[[Page 38137]]

As noted above, the Exchange has in place surveillance procedures that 
are adequate to properly monitor trading in the Shares in all trading 
sessions and may obtain information via ISG from other exchanges that 
are members of ISG or with which the Exchange has entered into a CSSA. 
In addition, as noted above, investors will have ready access to 
information regarding the Trust's bitcoin holdings, and quotation and 
last sale information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act, and in the best interest of investors and the public at large.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of a new 
type of Commodity-Based Trust Share based on the price of bitcoin that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f381869f96de909c9e9e969d8780b3809690dd949c85"><span class="__cf_email__" data-cfemail="186a6d747d357b7775757d766c6b586b7d7b367f776e">[email protected]</span></a>. Please include 
File Number SR-NYSEArca-2021-57 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to: Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSEArca-2021-57. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2021-57 and should be submitted 
on or before August 9, 2021.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15197 Filed 7-16-21; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>